Macroeconomic test 2

A nation's real GDP was $250 billion in Year 1 and $265 billion in Year 2. Its population was 120 million in Year 1 and 125 million in Year 2. What is its real GDP per capita in Year 2?

$2,120 per person

A statement that is often used to describe demand-pull inflation is

"too much money chasing too few goods."

Refer to the accompanying national income data (in billions of dollars). Gross domestic product is

$1,079 billion.

If a nation's real GDP is growing by 5 percent per year, its real GDP will double in approximately

14 years

The table contains data for a hypothetical single-product economy. Real GDP in year 3 is

150

Between 1950 and 2018, U.S. real GDP per capita grew at an average annual rate of about

2.0 percent.

In Year 1, the price level was 120 and the average nominal income was $30,000. In Year 2, the price level was 125 and the average nominal level of income was $32,000. What happened to real income from Year 1 to Year 2?

It rose by $600.

The following are examples of final goods in national income accounting, except

lumber

The system that measures the economy's overall performance is formally known as

national income accounting.

Supply factors in economic growth include the following, except

ncreases in purchases of output.

Compared to other industrial nations, inflation rates in the United States are

neither significantly higher nor significantly lower.

Refer to the accompanying graph. If the production possibilities curve for an economy is at CD but the economy is operating at point X, the reasons are most likely to be because of

nemployment and inefficient allocation of resources.

such as Social Security or unemployment compensation, are

not counted

In calculating GDP, governmental transfer payments, such as Social Security or unemployment compensation, are

not counted.

Homemaker

not in labor

Real GDP, or total output, in any year is equal to

number of worker-hours multiplied by labor productivity.

Demand-pull inflation

occurs when total spending exceeds the economy's ability to provide output at the existing price level.

An example of intermediate goods would be

paper and ink bought by a publishing company.

The Consider This box on patents and innovation demonstrates that

patent protection for U.S. companies may not be as effective when other countries do not respect or enforce U.S. patent laws.

Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a five-year period are shown in the table. Real GDP for year 5 is

40

The table shows the quantity of labor (measured in hours) and the productivity of labor (measured in real GDP per hour) in a hypothetical economy in three different years. Between Year 1 and Year 2, real GDP increased by

5.0 percent.

All figures are in billions of dollars. Net domestic product is

580

The total population of an economy is 175 million, the labor force is 125 million, and the number of employed workers is 117 million. The unemployment rate for this economy is

6.4 percent.

The accompanying table gives price and output data over a five-year period for an economy that produces only one good. If year 2 is the base year, then Real GDP in year 5 is

60

According to Okun's law, the negative GDP gap as a percentage of potential GDP is

8 percent.

Official unemployment rate statistics may

understate the amount of unemployment because of the presence of "discouraged" workers who are not actively seeking employment.

Which of the following statements is most accurate about the prospects for poorer ("follower") countries catching up with richer ("leader") countries?

Catching up is possible, as "follower countries" tend to grow faster than "leader countries."

local police and fire departments

G

Suppose the total monetary value of all final goods and services produced in a particular country in a year is $500 billion and the total monetary value of final goods and services sold is $450 billion. We can conclude that

GDP that year is $500 billion.

Suppose the next year, the dollar value of distribution activity fell to $70 billion, but the other values remained the same. Based on this, we could conclude that from year 1 to year 2,

GO fell by $10 billion, while GDP was unchanged.

Which of the following does not correctly characterize modern economic growth?

It has not affected the average lifespan of human beings.

Historically, real GDP has increased less rapidly than nominal GDP because

the general price level has increased.

In 1933, net private domestic investment was a minus $6.0 billion. This means that

the production of 1933's GDP used up more capital goods than were produced that year.

National income measures

the total of all sources of private income plus government revenue from taxes on production and imports.

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from

the underground economy.

At an annual growth rate of 7 percent, real GDP will double in about

10 years

national income data

24 billion

Refer to the accompanying data. All figures are in billions of dollars. The net domestic product is

255

A nation's real GDP was $250 billion last year and $265 billion this year. Its population was 122 million last year and 125 million this year. What is the growth rate of real GDP per capita in this year?

3.4

Which of the following statements is most accurate about modern economic growth?

Modern economic growth is characterized by sustained and ongoing increases in living standards.

Nation A's real GDP was $520 billion in Year 1 and $550 billion in Year 2. Its population was 150 million in Year 1 and 155 million in Year 2. On the other hand, Nation B's real GDP was $200 billion in Year 1 and $210 billion in Year 2; and its population was 53 million in Year 1 and 55 million in Year 2. Which of the following statements is true?

Nation A's real GDP growth in Year 2 is higher than Nation B's.

Which of the following is correct?

Total output = worker-hours × labor productivity.

The GDP gap measures the difference between

actual GDP and potential GDP.

If the GDP gap is positive, then

actual GDP is greater than potential GDP.

Suppose that inventories were $40 billion in year 1 and $50 billion in year 2. For year 2, national income accountants would

add $10 billion to other elements of investment in calculating total investment.

Which of the following is a demand factor in economic growth?

an increase in total spending in the economy

Who is least likely to be hurt by unanticipated inflation?

an owner of a small business

According to the Bureau of Labor Statistics, to be officially unemployed a person must

be in labor force

A nation's gross domestic product (GDP)

can be found by summing C + Ig + G + Xn.

All figures are in billions of dollars. Disposable income

cannot be determined from the data given.

The largest component of national income is

compensation of employees.

If the economy's real GDP doubles in 18 years, we can

conclude that its average annual rate of growth is about 3.9 percent.

Some economists prefer to use the term business fluctuations rather than business cycles to describe the historical growth record in the United States because

cycles implies regularity, while fluctuations does not.

Which of the following types of unemployment is directly associated with insufficient overall demand for goods and services?

cyclical unemployment

In an economy, the value of inventories was $75 billion in year 1 and $63 billion in year 2. In calculating total investment for year 2, national income accountants would

decrease it by $12 billion.

Inflation that occurs when total spending is greater than the economy's ability to produce output at the existing price level is

demand-pull inflation.

The main cause for the vast differences in per capita GDP levels seen across the globe today is the

different starting dates of modern economic growth in different parts of the world.

The gross domestic product is not a good measure of the standard of living in a nation because it

does not account for the composition and distribution of output.

Economic growth is best defined as an increase in

either real GDP or real GDP per capita.

For a given amount of nominal income, the real income will

fall if the price level rises.

Cost-push inflation tends to be characterized by all of the following, except

falling unemployment.

Real income will rise from one year to the next if nominal income

falls and the price level falls faster.

Search unemployment is a type of

frictional unemployment

Search unemployment is a type of

frictional unemployment.

college graduate using the summer

frictionally unemployed.

If net foreign factor income is zero and there are no statistical discrepancies, the sum of national income and the consumption of fixed capital equals

gross domestic product.

The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except

household production, or "do-it-yourself" activities of households.

percentage changes in the CPI,

is generally more volatile than core inflation.

The "recipes" category of the investment resource includes

knowing how and when to plant crops.

Modern economic growth often results in the following, except

less time for ordinary people to enjoy leisure activities because the primary focus is on production and work.

GDP price index" measures changes in the

prices of the output produced in the nation.

For a nation's real GDP per capita to rise during a year,

real GDP must increase more rapidly than the population.

Labor productivity is measured by

real output per worker-hour.

Unanticipated inflation

reduces the real burden of the public debt to the federal government.

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The person's real income will

rise by about 1 percent.

Suppose that a person's nominal income rises from $10,000 to $12,000 and the consumer price index rises from 100 to 105. The person's real income will

rise by about 15 percent.

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

the Consumer Price Index

If actual GDP is less than potential GDP,

the actual unemployment rate will be higher than the natural unemployment rate.

Refer to the accompanying data, which is for a specific year in a hypothetical economy for which Okun's law is applicable. If the unemployment rate in the economy fell to 6 percent, we could conclude that

the economy had moved from a point inside its production possibilities curve to a point on or very near the curve.

The number of worker-hours available in an economy is determined by the following, except

unemployment rate of the workforce.